What Credit Score Do You Need to Buy a House in Michigan?

Your credit score is one of the biggest numbers in your mortgage application, but it isn’t the whole story. Lenders use your credit score for a mortgage to gauge how likely you are to pay back what you borrow, and a stronger score can mean a lower interest rate (which could be tens of thousands of dollars saved over the life of your loan).

The good news? You don’t need perfect credit to buy a home in Michigan, and there’s plenty you can do to improve your score before you apply.

Here’s what this guide covers, and what you actually need to know before talking to a lender.

Key Takeaways

• Most Conventional Loans require a minimum credit score of 620. FHA Loans can go as low as 580 (or 500 with a larger down payment).
• VA Loans and USDA/Rural Development Loans have no federal minimum, though most lenders look for 580 to 640.
• Mortgage lenders use FICO scores, not the VantageScore you see on free credit apps. Your “real” mortgage score is often different from the one on Credit Karma.
• Payment history (35%) and credit utilization (30%) are the two biggest factors in your score by a wide margin.
• Meaningful credit improvement usually takes 3 to 6 months. Some changes show up in 30 days.
• At Treadstone, we work with buyers across the full credit spectrum. Your score is a starting point, not a verdict.

 

 

What Credit Score Do You Need to Buy a House?

The short answer: most homebuyers in Michigan can qualify for a mortgage with a credit score of 620 or higher, and some loan programs go lower. The right minimum for you depends on which loan type fits your situation, not on a single magic number.

Here’s how to think about it.

Minimum Credit Scores by Loan Type

Different loan programs have different credit floors. These are the typical minimums lenders look for, though individual lender requirements can vary.

Loan Type	Typical Minimum Credit Score	Down Payment
Conventional Loan	620	As low as 3%
FHA Loan	580 (or 500 with 10% down)	3.5% (or 10% for lower scores)
VA Loan	No federal minimum, most lenders want 580 to 620	0%
USDA / Rural Development Loan	620	0%
Jumbo Loan	700+	Varies, often 10% or more

A few things worth knowing as you read that table:

The federal agencies that back FHA, VA, and USDA Loans set program rules, but individual lenders can be stricter. That’s called a lender overlay, and it’s why one lender might tell you 580 and another wants 620 for the same FHA Loan. Working with a lender who understands your situation matters more than chasing the lowest published minimum.

If you’re a first-time homebuyer in Michigan, MSHDA (the Michigan State Housing Development Authority) offers down payment assistance with its own credit requirements, typically a 640 minimum. Worth exploring if you qualify.

And if your score is below these thresholds today, don’t write off homeownership. We work with buyers all the time who get mortgage-ready in three to six months with the right plan.

 

What’s Considered a “Good” Credit Score for a Mortgage?

FICO scores range from 300 to 850, and lenders group them into tiers. Where you land affects not just whether you qualify, but the interest rate you’re offered.

• 800 to 850 — Exceptional. You’ll see the best rates available. Roughly the top 20% of consumers.
• 740 to 799 — Very Good. Strong rates and easy approvals across loan types. This is the sweet spot most lenders consider “great” mortgage credit.
• 670 to 739 — Good. Solid options across Conventional, FHA, VA, and USDA Loans. Rates are competitive, though not the absolute lowest.
• 580 to 669 — Fair. Still qualifies for many mortgages, especially FHA and VA Loans. Interest rates will be higher, and lenders will look more closely at the rest of your financial picture.
• 300 to 579 — Poor. Limited mortgage options, though not zero. FHA Loans with 10% down can work for some borrowers in this range. A few months of focused improvement usually opens more doors.

If your score is 740 or higher, you’re in great shape. If it’s between 620 and 739, you have real options and we can walk you through them. Below 620, the right next move is usually a conversation, not a panic.

Why Your Credit Score Matters for a Mortgage

Lenders estimate your ability to pay back money borrowed based on your credit score. A high credit score can result in a lower interest rate and save you thousands of dollars in interest paid over the life of the loan.

At a glance, credit scores measure your credit profile health, making it a valuable tool for mortgage lenders. While there is more to your credit profile than your credit score, many loan programs consider both during the loan application process.

Which Credit Score Do Mortgage Lenders Actually Use?

Here’s something that surprises a lot of first-time buyers: the credit score you see on Credit Karma, your banking app, or your credit card’s free monitoring tool is almost never the score your mortgage lender will use.

Most of those free apps show a VantageScore, which is a different scoring model than the one mortgage lenders rely on. Mortgage lenders use FICO scores, including Treadstone, specifically older versions of FICO (FICO 2, 4, and 5) approved by Fannie Mae and Freddie Mac, the federally backed agencies that set standards for most home loans.

There’s a second wrinkle. When you apply for a mortgage, the lender pulls all three of your FICO scores, one from each major credit bureau (Equifax, Experian, and TransUnion). They then use the middle score, not the highest or the lowest. If you’re applying with a co-borrower, the lender typically uses the lower of your two middle scores.

What that means in practice:

The number you’ve been watching on a free app might be 20 to 50 points higher (or sometimes lower) than your mortgage FICO. That doesn’t make the free score wrong, just different. It’s measuring something slightly different for a different purpose.

If you want to see the scores a lender will actually use, you can have a Treadstone Loan Officer pull your credit during a pre-approval. We’ll show you exactly what your file looks like through a lender’s eyes and tell you whether you’re ready to apply today or worth waiting a few months to optimize.

Curious where your real mortgage score puts you? A Treadstone Loan Officer can pull your file during a no-pressure pre-approval and walk you through your options.

How Your FICO Score Is Calculated

Your credit score is comprised of five core elements, each of which are calculated by various aspects of your credit profile. When each component is measured and scored, it is conglomerated into one figure.

The largest factor in your credit score is payment history, which is around 35% of the weighting of your credit score calculation. Your payment history is scored by your track record of on-time payments on loans and lines of credit. Paying your bills on time will have the greatest impact on your score!

Around 30% of your score is based on the amount you owe, as a proportion of your total available credit. Low balances and high available credit will result in a positive score.

15% is ranked by the age of your credit lines. Those with many years of credit history (regardless of payment history) will have higher credit score than those who recently opened their first credit card.

10% is based on new lines of credit. Specifically, the number of inquiries you have collected in last previous 24 months. The fewer inquiries, the better!

The final 10% of your score weighting is determined by your mix of fixed debts, which are loans with static monthly and revolving debts, which are open lines of credit with variating payments and schedules. A mix of these debts are best!

How to Raise Your Credit Score Before Applying

To raise your score and make your credit profile healthier, here are some tips to get mortgage-ready:

Do This:

• Make all payments on time! As we’ve previously stated, your payment history is the largest factor in your credit score. One way to help ensure all don’t miss a payment is by setting up auto-pay on your accounts.
• Use credit cards less! This is one of the easiest things to do when trying to buy a home. By using credit cards less, your credit utilization is decreased, which increases your credit profile’s health (and increases your score!)
• File for a copy of your credit report. You can collect one free report from each of the credit bureaus per week at AnnualCreditReport.com, so look it over and correct any reported errors. If errors exist, work quickly with the reporting companies to resolve them. Need help? It may also be useful to work with your Loan Officer when deciding which errors to tackle first.
• Ask for a higher credit limit on credit cards. By doing this, you may proportionally decrease the amount of available credit you are using, which makes your credit profile healthier. Before you start, try to find out if this will result in a hard inquiry against your credit. Remember: just because you have a higher limit, that doesn’t mean you should use it.

Avoid This:

• Don’t take out new lines of credit. New credit cards, auto loans, furniture financing, and more drastically affects your credit profile. This goes beyond your score, including qualification requirements like your debt-to-income (DTI) ratio.
• Don’t max out your credit cards or other rotating debts. The less credit you use, as a proportion of your line of credit, the healthier your profile will be!
• Don’t collect new hard inquiries. Excessive loan applications and credit pulls may “ding” your credit for up to two years, even if you are denied.
• Don’t pay the minimum balance on revolving debts — instead, try to pay off as much as you can afford. As a result, this will decrease credit utilization and lower your monthly payments.

How Long Does It Take to Improve Your Credit Score?

Most borrowers see meaningful credit score improvement in three to six months of focused effort. Smaller changes can show up in as little as 30 days, and bigger rebuilds (after a bankruptcy, foreclosure, or major collection) can take 12 to 24 months. The exact timeline depends on what’s pulling your score down and how aggressively you can address it.

Here’s a realistic look at what to expect.

30 Days: Quick Wins

Some changes move your score within a single billing cycle, because they update as soon as your creditors report to the bureaus.

Paying down credit card balances is the fastest lever you have. Credit utilization (how much of your available credit you’re using) makes up about 30% of your FICO score, and it has no memory. Drop your utilization from 60% to 20% this month, and next month’s score reflects it.

Disputing and removing inaccurate items on your credit report can also move things quickly. If a paid-off account is still showing a balance, or a collection isn’t yours, getting it corrected can lift your score within 30 to 45 days.

Becoming an authorized user on a family member’s well-established credit card can show up in a cycle or two and pad your average account age, though lenders vary in how much weight they give it.

3 to 6 Months: Real Progress

This is the timeline most first-time and credit-rebuilding buyers should plan around. It’s long enough for new positive habits to start outweighing old negative marks, but short enough to keep momentum.

In a three-to-six-month window, you can typically:

• Build a streak of on-time payments that begins to outweigh recent late marks. Payment history is 35% of your score, and recent activity carries more weight than old activity. Six clean months can meaningfully reshape your file.
• Pay down revolving debt to under 30% utilization across all cards (and ideally under 10% on each individual card for the strongest impact).
• Let any recent hard inquiries age. Inquiries fall off your score’s calculation after 12 months, but their impact fades well before that.
• Wait out the dip from any new accounts you opened. New credit lowers your average account age temporarily, but the effect lessens as the account matures.

For most Michigan homebuyers we work with, three to six months of intentional effort is enough to move from “not quite ready” to “fully mortgage-ready” — sometimes with a 40 to 80 point swing.

12 to 24 Months: Major Rebuilds

If you’re recovering from something significant, the timeline is longer, but homeownership is still very much on the table.

After a Chapter 7 bankruptcy, most loan programs require a two-year waiting period (four years for Conventional Loans). After a foreclosure, expect three to seven years depending on the loan type, though FHA Loans can sometimes be available sooner.

Collections, charge-offs, and judgments stay on your credit report for up to seven years, but their impact on your score lessens significantly after about 24 months, especially once you’ve built newer positive history alongside them.

The key during a longer rebuild is consistent, boring credit behavior: one or two open credit lines, low utilization, every payment on time, no new applications. Keep it simple.

What Slows Things Down

A few common mistakes stretch the timeline unnecessarily:

• Closing old credit cards, even ones you don’t use, shortens your average account age and shrinks your total available credit (which raises your utilization ratio). Keep them open.
• Opening new accounts right before applying for a mortgage. New hard inquiries and brand-new accounts drop your score temporarily, right when you need it stable.
• Paying only the minimum on credit cards. The balance keeps your utilization high month after month. Even small extra payments accelerate things.
• Ignoring small collections. A $40 medical collection can quietly drag your score down for years. Many are negotiable or can be removed once paid.

Even with all of these tips to raise your credit, we have one piece of advice: don’t obsess over your credit score! Treadstone is an amazing Michigan Mortgage Lender with plenty of tools for clients with a range of credit scores and situations.

Wondering how close you are to mortgage-ready? Let’s talk it through and build you a personalized plan that fits your timeline.

Can You Get a Mortgage With Bad Credit in Michigan?

Yes, you can buy a home in Michigan with less-than-perfect credit. Borrowers with FICO scores as low as 500 to 580 qualify for FHA Loans every day, and VA Loans have no federal minimum at all. Your credit score is one factor lenders look at, not the only one, and Michigan has several loan programs built specifically for buyers who don’t fit the “perfect credit” mold.

What Counts as “Bad Credit” for a Mortgage?

For mortgage purposes, lenders generally consider anything below 620 to be subprime territory. Scores between 580 and 619 are workable for several loan programs. Scores between 500 and 579 narrow your options but don’t eliminate them. Below 500, you’ll need to focus on rebuilding before applying.

That said, “bad credit” is a label, not a sentence. Two borrowers with a 590 FICO can have completely different files. One might be a medical-debt collection situation that’s easy to address. The other might be a pattern of recent missed payments that needs more time. A real lender conversation is the only way to know which one you are.

Frequently Asked Questions About Credit Scores and Mortgages

What is the biggest killer of credit scores?

Missed or late payments. Payment history makes up about 35% of your FICO score, and a single payment 30 days late can drop your score 60 to 110 points. The good news: it’s also the easiest factor to control going forward. Setting up auto-pay on every account and keeping a small cash buffer in checking are two of the highest-return habits you can build. Six straight months of on-time payments meaningfully reshapes your score, even after past stumbles. After missed payments, high credit card utilization is the next biggest score killer.

What credit score do I need to buy a $400,000 house?

The minimums are the same regardless of home price: 620 for a Conventional Loan, 580 for an FHA Loan, no federal minimum for VA Loans. What changes at a higher price point is how much your score affects your monthly payment.

On a $400,000 loan, the difference between a 680 and a 760 FICO can be in the ballpark of $150 to $300 per month. A Treadstone Loan Officer can model exact payment scenarios for your situation, including how a 20-point score bump would change your bottom line.

Please note: Example payment differences are illustrative only and depend on credit, loan program, rate, and market conditions at the time of application.

How rare is an 830 FICO score?

More common than people think. Roughly 1 in 5 Americans has a FICO score of 800 or higher, and the U.S. average is around 715. An 830 puts you in approximately the top 15% of consumers, which is excellent but far from rare. For mortgage purposes, by the way, anything 760 and above usually qualifies you for the lender’s best available rate tier. Because of this, chasing the top of the chart isn’t necessary for homebuying.

Can I raise my credit score 100 points in 30 days?

Possible but rare. A more realistic 30-day target is 20 to 50 points, which is still enough to move many borrowers into a better credit tier. The fastest legitimate moves: aggressively pay down credit card balances (utilization updates within one billing cycle), dispute errors on your credit report, and request credit limit increases. If you’re actively applying for a mortgage with Treadstone, your Loan Officer can also request a rapid rescore, which updates your file in 3 to 5 business days instead of waiting a full cycle.

How long does it take to build credit from 500 to 600?

For most people, 6 to 12 months of focused effort. Going from 500 to 600 is one of the most achievable credit jumps there is, because the highest-impact fixes (lowering utilization, removing errors, adding a positive new tradeline) move scores the most when you’re starting low. A secured credit card used responsibly often lifts a 500 score 20 to 40 points within 60 to 90 days. Once you cross 580, FHA Loan homeownership becomes a real conversation with a Treadstone Loan Officer.

Is it better to have no credit?

For mortgage purposes, no. A “credit invisible” file (no FICO score because you have no recent credit activity) makes homebuying harder, though not impossible. Treadstone offers manual underwriting on FHA Loans and VA Loans, which builds your file from rent, utility, insurance, and phone payments instead of a credit score. That path absolutely closes loans, but it takes more documentation. For most buyers, one secured credit card used responsibly for six months is a simpler way to establish a usable FICO score.

Does Dave Ramsey care about credit scores?

Dave Ramsey is well-known for teaching a debt-free lifestyle and encouraging people to avoid building their financial identity around their FICO score. There’s a lot to admire in that philosophy, and plenty of Treadstone’s happiest clients are Ramsey-style savers. If you’ve followed his path and don’t have a credit score, you can still buy a home through manual underwriting on an FHA Loan or VA Loan. Treadstone has closed many of these. Whether you maximize credit or live credit-free, there’s a mortgage path that fits.

You’re More Than Your Credit Score – Let Us Help!

At Treadstone, you’re more than your credit score. We’re here to work with you and your unique situation.

Do you have questions on how to get started or further improve your score when applying for a mortgage?

*Treadstone Funding and its employees are not financial advisors. Please contact a licensed financial advisor for specific advice.